‘We Have To Rip The Band-Aid Off’: The Great NYC Hotel Reawakening Is On
More than a year ago, hundreds of New York City’s hotels shut their doors, putting thousands out of work and plunging the sector into an acute crisis. But many are taking their first steps toward reopening after months of dormancy as cautious optimism overshadows lagging rates and desperately low occupancy.
“At some point, we have to rip the Band-Aid off,” said Loews Regency New York Managing Director John Maibach, whose Midtown hotel has been closed for 13 months — but plans to open in May. "We've got to get the hotel open."
There are 116 hotels still temporarily closed in New York City, according to lodging research firm STR, and six have officially shut forever. Some 144 have reopened after closing at some point in the crisis, a number that is slowly growing each day as the city shuffles back to some form of normality.
“You never thought you’d shut a hotel, it was a nightmare … you look up and every light is off in the building,” said John Fitzpatrick, who owns and runs the Fitzpatrick Manhattan and The Fitzpatrick Grand Central.
The 155-room Fitzpatrick Grand Central on East 44th Street has remained open through the crisis, getting by with a smattering of demand from essential workers, airline employees and the occasional traveler.
Now, the Fitzpatrick Manhattan, a 150-room hotel at 687 Lexington Ave. that has been closed throughout the coronavirus pandemic, is reopening later this month, but getting there is no easy feat.
“It’s like starting a steamship up, it’s taken a few weeks, because we have to go through every single room now and do a deep cleaning,” he said. “We're bringing our housekeepers in earlier and they're having a really good go at it."
Hotel sources say there are enough positive signs to suggest the sector is turning a corner, even though sparse demand has kept room prices low. For the second week of April, open hotels in New York City were on average just over 50% occupied with revenue per available room at $75, per STR. But when including the 116 hotels still not taking guests, occupancy is closer to just 30% and RevPAR just under $50.
“It's heading in the right direction, because you're so far down, there's only one way to go, and that's up,” said Vijay Dandapani, the CEO of the Hotel Association of New York City.
In the second week of April in 2019, the city's hotels had an average occupancy of 86% and RevPAR at $216 — and that was considered a slow market at the time.
The Residence Inn Central Park, Mandarin Oriental and The Algonquin will be opening up this month, while the New York Edition will be opening up in May, according to the hotel association. The Sofitel in New York is reopening in June, according to its website.
The Plaza, the grande dame of New York City hospitality, filed an amendment to its Worker Adjustment and Retraining Notification from when it temporarily closed last March declaring its furloughs for 73 non-union employees would "continue until approximately June 2021." A spokesperson said there is not yet any reopening for the hotel, which counted 531 union employees when it closed last year, to announce.
“There will be at some point — I don't know that it will happen before September — a rush to the gates from some people,” said Dandapani, who still believes some of the hotels categorized as temporarily closed will never reopen. Just last week, for example, Vornado officially announced it will demolish its Hotel Pennsylvania instead of reopening it.
Key to the reopening is the vaccination rate in New York, sources said, where around 25% of the residents are now inoculated. Quarantine measures that have been in place in New York since last year have been dropped for both domestic and international travelers, buoying the outlook for travel.
“I also think with the new [presidential] administration, there's a sense of calm again in the States,” Fitzpatrick said in a phone interview from his native Ireland. “People feel relaxed again, there’s not that tense feeling.”
So far, he said he has had little trouble securing staff, save for a few challenges in rehiring accountants and chefs. But as more hotels start to look for employees, there could be challenges, particularly for operations that have relied on foreign workers, per Skift.
“It's quite remarkable, hotels that are opening up in other parts of the country are having difficulty recruiting labor,” LW Hospitality Advisors President and CEO Dan Lesser said. “Federally, unemployment has now been extended … so economics don't make sense for a lot of folks to go back to work.”
Operators said many of the vast, large-scale operations are watching how much demand the smaller hotels can capture. Those with 150 rooms or fewer to fill face less risk, and some are chancing it based on the fact the city feels alive once more.
“When we saw things opening in terms of restrictions, the weather was starting to get better, we felt some demand increasing in the market,” said Matt Hurlburt, the area director of hotel operations for Kimpton Hotels & Restaurants.
This week, Gov. Andrew Cuomo allowed bars and restaurants to remain open until midnight, a far cry from the 10 p.m. curfews of winter, when diners were required to sit on the sidewalks in sub-zero temperatures for a meal out.
The Kimpton Muse Hotel on 46th Street reopened late last month, and is now operating at around 30% occupancy during the week, mainly hosting people from nearby states, Hurlburt said.
“You finally get to make these positive calls and people are excited,” he said.
The Muse has ridden a particularly bumpy road, even by 2020 New York City hotel standards. It closed its doors in April last year, but it reopened in the summer. But as the brutal winter set in and cases of the coronavirus across the country skyrocketed, Kimpton made the decision to shut down the hotel in January.
“We were really proud to reopen … To close back down was very difficult, and it was difficult on the team,” Hurlburt said. “It’s been great to get them back on board.”
Still, even as the U.S. vaccine drive continues to gain speed, hotels in the city are at the mercy of business travel starting up once again and international travelers coming back, neither of which has yet happened.
Broadway, one of the biggest tourist attractions in the city, remains closed, and places in Europe and South America continue to grapple with how to successfully run mass immunizations.
“Rates are very low, it will not cover our expenses yet,” said Brenda Correa, the general manager of Iberostar 70 Park Avenue, a 205-room hotel that has been dark since March 29, 2020.
The hotel normally has a team of 79 people, but it now employs a skeleton crew of eight. She said the hotel is eyeing and hoping for a July 1 reopening, but it is waiting and watching to see if demand improves.
“In the next couple of weeks, we're gonna have another meeting with our revenue departments, we'll see how the market is, you know, getting there, and we'll see if it goes with what we need to achieve in order to maintain the property open,” Correa said.
But at the 379-room Loews Regency New York at 540 Park Ave., Maibach said his staff has monitored website traffic and future bookings to give them the certainty they need to reopen on May 12 — after 13 months of being closed.
“We feel as though we're at a point right now where there’s enough reasons to be optimistic that we can pull this off,” Maibach, the managing director.
Loews staff has added new markings around the building to encourage social distancing, and they have new cleaning and mask requirements, Maibach said. But they aren't expecting a rush just yet.
“International travel is not something we're going to count on for the rest of this year," he said. "But slowly, surely, you're just starting to see some more activity, restaurants allowing more people, and we think we're at a point we can take that chance.”